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Page No 6.24:

Question 1:

Prepare Accounting Equation from the following:

(₹)

1.

Sandeep started business with Cash

1,00,000

2.

Purchased furniture for cash

5,000

3.

Purchased goods for cash

20,000

4.

Purchased goods on credit

36,000

5.

Paid for rent

700

6.

Goods costing ₹40,000 sold at a profit of 20% for cash

Answer:

ACCOUNTING EQUATION

S. No.

Transaction

Assets

=

Liabilities

+

Capital

Cash

+

Furniture

+

Stock

=

Creditors

(i)

Sandeep started business with cash

1,00,000

+

1,00,000

1,00,000

=

+

1,00,000

(ii)

Purchased furniture for cash

–5,000

+5,000

95,000

+

5,000

=

+

1,00,000

(iii)

Purchased goods for cash

–20,000

+20,000

75,000

+

5,000

+

20,000

=

+

1,00,000

(iv)

Purchased goods on credit

+36,000

+36,000

75,000

+

5,000

+

56,000

=

36,000

+

1,00,000

(v)

Rent paid

-700

–700

74,300

+

5,000

+

56,000

=

36,000

+

99,300

(vi)

Goods costing Rs 40,000 sold at a profit of 20% for cash

+48,000

-40,000

+8,000

1,22,300

+

5,000

+

16,000

=

36,000

+

1,07,300

Working Note:

WN1 Calculation of Sale Price

Page No 6.24:

Question 2(A):

Show the Accounting Equation on the basis of the following and present a balance sheet on the last new equation balances:

(₹)

(i)

Manu started business with cash

50,000

(ii)

Bought furniture for

500

(iii)

Purchased goods on credit

4,000

(iv)

Sold goods on cash (cost ₹500) for

700

(v)

Received rent

200

(vi)

Purchased goods for cash

1,000

(vii)

Withdrew for personal use

700

(viii)

Paid to creditors

400

(ix)

Paid for salaries

200

Answer:

ACCOUNTING EQUATION

S. No.

Transaction

Assets

=

Liabilities

+

Capital

Cash

+

Furniture

+

Stock

=

Creditors

(i)

Manu started business with cash

+50,000

+50,000

50,000

=

+

50,000

(ii)

Purchased Furniture

–500

+500

49,500

+

500

+

50,000

(iii)

Purchased goods on credit

+4,000

+4,000

49,500

+

500

+

4,000

=

4,000

+

50,000

(iv)

Sold goods costing Rs 500 for Rs 700

+700

–500

+200 (Profit)

50,200

+

500

+

3,500

=

4,000

+

50,200

(v)

Rent received

+200

+200 (Income)

50,400

+

500

+

3,500

=

4,000

+

50,400

(vi)

Purchased goods for cash

–1,000

+1,000

49,400

+

500

+

4,500

=

4,000

+

50,400

(vii)

Withdrew for personal use

–700

–700 (Drawings)

48,700

+

500

+

4,500

=

4,000

+

49,700

(viii)

Paid to creditors

–400

–400

48,300

+

500

+

4,500

=

3,600

+

49,700

(ix)

Salaries paid

–200

-200

48,100

+

500

+

4,500

=

3,600

+

49,500

Balance Sheetas on ……

Liabilities

Amount(Rs)

Assets

Amount (Rs)

Creditors

3,600

Cash

48,100

Capital

49,500

Furniture

500

Stock

4,500

53,100

53,100

Page No 6.24:

Question 2(B):

Prove that the Accounting Equation is satisfied in all the following transactions of Rajaram. Also prepare a Balance Sheet:−
1. Started business with Cash ₹1,20,000.
2. Purchased a typewriter for Cash for ₹8,000 for office use.
3. Purchased goods for ₹50,000 for cash.
4. Purchased goods for ₹40,000 on credit.
5. Goods costing ₹60,000 sold for ₹80,000 on credit.
6. Paid for Rent ₹1,500 and for salaries ₹2,000.
7. Received ₹800 for Commission.
8. Withdrew for private use ₹5,000 in cash.

Answer:

ACCOUNTING EQUATION

S. No.

Transaction

Assets

=

Liabilities

+

Capital

Cash

+

Typewriter

+

Stock

+

Debtors

=

Creditors

(i)

Started business with cash

+1,20,000

+

1,20,000

1,20,000

=

1,20,000

(ii)

Purchased typewriter for office use

–8,000

+

8,000

1,12,000

+

8,000

=

1,20,000

(iii)

Purchased goods for cash

–50,000

+50,000

62,000

+

8,000

+

50,000

=

1,20,000

(iv)

Purchased goods on credit

+40,000

40,000

62,000

+

8,000

+

90,000

=

40,000

+

1,20,000

(v)

Goods costing Rs 60,000 sold for Rs 80,000 on credit

–60,000

+80,000

+20,000 (Profit)

62,000

+

8,000

+

30,000

+

80,000

=

40,000

+

1,40,000

(vi)

Paid rent Rs 1,500 and salaries Rs 2,000

–3,500

–3,500 (Expenses)

58,500

+

8,000

+

30,000

+

80,000

=

40,000

+

1,36,500

(vii)

Commission received

+800

+800 (Income)

59,300

+

8,000

+

30,000

+

80,000

=

40,000

+

1,37,300

(viii)

Withdrew cash for private use

–5,000

–5,000 (Drawings)

54,300

+

8,000

+

30,000

+

80,000

=

40,000

+

1,32,300

Balance Sheet of Rajaramas on ……

Liabilities

Amount(Rs)

Assets

Amount (Rs)

Creditors

40,000

Cash

54,300

Capital

1,32,300

Typewriter

8,000

Stock

30,000

Debtors

80,000

1,72,300

1,72,300

Page No 6.25:

Question 3:

Prepare Accounting Equation from the following :
(a) Started business with Cash ₹2,00,000.
(b) Purchased goods for Cash ₹60,000 and on Credit ₹1,50,000.
(c) Sold goods for Cash costing ₹40,000 at a profit of 20% and on Credit costing ₹72,000 at a profit of 25%.
(d) Paid for Rent ₹5,000.

Answer:

ACCOUNTING EQUATION

S. No.

Transaction

Assets

=

Liabilities

+

Capital

Cash

+

Stock

+

Debtors

=

Creditors

(i)

Started business with cash

+2,00,000

+2,00,000

2,00,000

=

2,00,000

(ii)

Purchased Goods for Cash Rs 60,000 and on credit Rs 1,50,000

–60,000

+2,10,000

+1,50,000

+1,40,000

+

2,10,000

=

1,50,000

+

2,00,000

(iii)

Sold goods for cash costing Rs 40,000 at a profit of 20% and on credit Rs 72,000 at a profit of 25%

+48,000

–1,12,000

+90,000

+26,000 (Profit)

+1,88,000

+

98,000

+

90,000

=

1,50,000

+

2,26,000

(iv)

Rent paid

–5,000

–5,000 (Expenses)

+1,83,000

+

98,000

+

90,000

=

1,50,000

+

2,21,000

Working Note:

WN1Calculation of Selling Price of Goods Sold

Total Cost of Goods Sold = 40,000 + 72,000 = Rs 1,12,000

Page No 6.25:

Question 4:

Prepare Accounting Equation from the following:

(₹)

(a)

Kunal started business with cash

2,50,000

(b)

He purchased furniture for cash

35,000

(c)

He paid commission

2,000

(d)

He purchased goods on credit

40,000

(e)

He sold goods (Costing ₹20,000) for cash

26,000

Answer:

ACCOUNTING EQUATION

S. No.

Transaction

Assets

=

Liabilities

+

Capital

Cash

+

Furniture

+

Stock

=

Creditors

(i)

Kunal started business with cash

+2,50,000

+

2,50,000

2,50,000

=

2,50,000

(ii)

Purchased furniture for cash

–35,000

+35,000

2,15,000

+

35,000

=

2,50,000

(iii)

Commission paid

–2,000

-2,000 (Expense)

2,13,000

+

35,000

=

+

2,48,000

(iv)

Purchased goods on credit

+40,000

+40,000

2,13,000

+

35,000

+

40,000

=

40,000

+

2,48,000

(iv)

Sold goods costing Rs 20,000 for Rs 26,000

+26,000

–20,000

+6,000 (Profit)

2,39,000

+

35,000

+

20,000

=

40,000

+

2,54,000

Page No 6.25:

Question 5:

Mohit has the following transactions, prepare Accounting Equation :

(₹)

(a)

Business started with cash

1,75,000

(b)

Purchased goods from Rohit

50,000

(c)

Sold goods on credit to Manish (costing ₹17,500)

20,000

(d)

Purchased furniture for office use

10,000

(e)

Cash paid to Rohit in full settlement

48,500

(f)

Cash received from Manish

20,000

(g)

Rent paid

1,000

(h)

Cash withdrew for personal use

3,000

Answer:

ACCOUNTING EQUATION

S. No.

Transaction

Assets

=

Liabilities

+

Capital

Cash

+

Stock

+

Debtors

Furniture

=

Creditors

(i)

Started business with cash

+1,75,000

+

1,75,000

1,75,000

=

+

1,75,000

(ii)

Purchased goods from Rohit

+50,000

+50,000

1,75,000

+

50,000

=

50,000

+

1,75,000

(iii)

Sold goods costing Rs 17,500 for Rs 20,000 to Manish

–17,500

+20,000

+2,500 (Profit)

1,75,000

+

32,500

+

20,000

=

50,000

+

1,77,500

(iv)

Purchased furniture for office use

–10,000

+10,000

1,65,000

+

32,500

+

20,000

+

10,000

=

50,000

+

1,77,500

(v)

Cash paid in full settlement to Rohit

–48,500

–50,000

+1,500 (Gain)

1,16,500

+

32,500

+

20,000

+

10,000

=

0

+

1,79,000

(vi)

Cash received from Manish

+20,000

–20,000

1,36,500

+

32,500

+

0

+

10,000

=

+

1,79,000

(vii)

Rent paid

–1,000

–1,000 (Expense)

1,35,500

+

32,500

+

+

10,000

=

+

1,78,000

(viii)

Withdrew cash for private use

–3,000

–3,000 (Drawings)

1,32,500

+

32,500

+

+

10,000

=

+

1,75,000

Page No 6.25:

Question 6:

What will be the effect of the following on the Accounting Equation?
(i) Harish started business with cash ₹1,80,000.
(ii) Purchased goods for cash ₹60,000 and on credit ₹30,000.
(iii) Sold goods for cash ₹40,000; costing ₹24,000.
(iv) Rent paid ₹5,000; and rent outstanding ₹2,000.
(v) Sold goods on credit ₹50,000 (costing ₹38,000).
(vi) Salary paid in advance ₹3,000.

Answer:

ACCOUNTING EQUATION

S. No.

Transaction

Assets

=

Liabilities

+

Capital

Cash

+

Stock

+

Debtors

Prepaid Salary

=

Creditors

+

Outstanding Rent

(i)

Harish started business with cash

+1,80,000

+

1,80,000

1,80,000

=

1,80,000

(ii)

Purchased goods for cash Rs 60,000 and on credit Rs 30,000

–60,000

+90,000

+30,000

1,20,000

+

90,000

=

30,000

+

1,80,000

(iii)

Sold goods costing Rs 24,000 for Rs 40,000

+40,000

–24,000

+16,000 (Profit)

1,60,000

+

66,000

=

30,000

+

1,96,000

(iv)

Rent paid Rs 5,000 and outstanding Rs 2,000

–5,000

+2,000

–7,000 (Expense)

1,55,000

+

66,000

=

30,000

+

2,000

+

1,89,000

(v)

Goods costing Rs 38,000 sold on credit for Rs 50,000

–38,000

+50,000

+12,000 (Profit)

1,55,000

+

28,000

+

50,000

=

30,000

+

2,000

+

2,01,000

(vi)

Salary paid in advance

–3,000

+3,000

1,52,000

+

28,000

+

50,000

+

3,000

=

30,000

+

2,000

+

2,01,000

Page No 6.25:

Question 7:

Use Accounting Equation to show the effect of the following transactions of M/s Royal Traders :Prepare

(₹)

(a)

Started Business with Cash

1,20,000

(b)

Purchased goods for cash

10,000

(c)

Rent received

5,000

(d)

Salary Outstanding

2,000

(e)

Prepaid insurance

1,000

(f)

Received interest

700

(g)

Sold goods for cash (costing ₹5,000)

7,000

(h)

Goods destroyed by fire

500

Answer:

ACCOUNTING EQUATION

S. No.

Transaction

Assets

=

Liabilities

+

Capital

Cash

+

Stock

+

Prepaid Insurance

=

Outstanding Salary

(i)

Started business with cash

+1,20,000

+

1,20,000

1,20,000

=

1,20,000

(ii)

Purchased goods for cash

–10,000

+10,000

1,10,000

+

10,000

=

1,20,000

(iii)

Rent received

+5,000

+5,000 (Income)

1,15,000

+

10,000

=

1,25,000

(iv)

Outstanding salary

+2,000

–2,000 (Expense)

1,15,000

+

10,000

=

2,000

+

1,23,000

(iv)

Prepaid insurance

–1,000

+1,000

1,14,000

+

10,000

+

1,000

=

2,000

+

1,23,000

(iv)

Interest received

+700

+700 (Income)

1,14,700

+

10,000

+

1,000

=

2,000

+

1,23,700

(iv)

Sold goods costing Rs 5,000 for Rs 7,000

+7,000

–5,000

+2,000 (Profit)

1,21,700

+

5,000

+

1,000

=

2,000

+

1,25,700

(iv)

Goods destroyed by fire

–500

–500

1,21,700

+

4,500

+

1,000

=

2,000

+

1,25,200

Page No 6.26:

Question 8(A):

Prepare Accounting Equation from the following :−
1. Started business with cash ₹75,000 and goods ₹25,000.
2. Paid for Rent ₹2,000.
3. Bought goods for cash ₹30,000 and on credit for ₹44,000.
4. Goods costing ₹50,000 sold at a profit of 25%, out of which ₹27,500 received in Cash.
5. Purchased a Motor-cycle for personal use ₹20,000.

Answer:

ACCOUNTING EQUATION

S. No.

Transaction

Assets

=

Liabilities

+

Capital

Cash

+

Stock

+

Debtors

=

Creditors

(i)

Started business with cash and goods

+75,000

+

25,000

=

+

1,00,000

75,000

+

25,000

=

1,00,000

(ii)

Rent paid

–2,000

–2,000 (Expense)

73,000

+

25,000

=

98,000

(iii)

Bought goods for cash and on credit

–30,000

+74,000

+44,000

43,000

+

99,000

=

44,000

+

98,000

(iv)

Goods costing Rs 50,000 sold at a profit of 25% out of which Rs 27,500 received in cash

+27,500

–50,000

+35,000

+12,500 (Profit)

70,500

+

49,000

+

35,000

=

44,000

+

1,10,500

(v)

Purchased motor cycle for personal use

–20,000

–20,000 (Drawings)

50,500

+

49,000

+

35,000

=

44,000

+

90,500

Working Note:

WN1Calculation of Selling Price

Page No 6.26:

Question 8(B):

Prepare Accounting Equation from the following and also prepare a Balance Sheet :
1. Raghu started business with Cash ₹1,50,000.
2. Bought goods for cash ₹80,000 and on credit for ₹40,000.
3. Goods costing ₹75,000 sold at a profit of 3313%. Half the payment received in cash.
4. Goods costing ₹10,000 sold for ₹12,000 on credit.
5. Paid for Rent ₹2,000 and for salaries ₹4,000.
6. Goods costing ₹20,000 sold for ₹18,500 for Cash.

Answer:

ACCOUNTING EQUATION

S. No.

Transaction

Assets

=

Liabilities

+

Capital

Cash

+

Stock

+

Debtors

=

Creditors

(i)

Raghu started business with cash

+1,50,000

+

1,50,000

1,50,000

=

+

1,50,000

(ii)

Purchase goods for cash and on credit

–80,000

+1,20,000

+40,000

70,000

+

1,20,000

=

40,000

+

1,50,000

(iii)

Goods costing Rs 75,000 sold at a profit of 3313%. Half amount was received in cash.

+50,000

–75,000

+50,000

+25,000 (Profit)

1,20,000

+

45,000

+

50,000

=

40,000

+

1,75,000

(iv)

Goods costing Rs 10,000 sold for Rs 12,000 on credit

–10,000

+12,000

+2,000 (Profit)

1,20,000

+

35,000

+

62,000

=

40,000

+

1,77,000

(v)

Rent and salaries paid

–6,000

–6,000 (Expense)

1,14,000

+

35,000

+

62,000

=

40,000

+

1,71,000

(vi)

Goods costing Rs 20,000 sold for Rs 18,500 cash

+18,500

–20,000

–1,500 (Loss)

1,32,500

+

15,000

+

62,000

=

40,000

+

1,69,500

Working Note:

WN1Calculation of Selling Price

Balance Sheet of Raghuas on ……

Liabilities

Amount(Rs)

Assets

Amount (Rs)

Creditors

40,000

Cash

1,32,500

Capital

1,69,500

Stock

15,000

Debtors

62,000

2,09,500

2,09,500

Page No 6.26:

Question 9:

If the Capital of a business is ₹1,20,000 and Outside liabilities are ₹20,000, calculate total assets of the business.

Answer:

Assets

=

Liabilities + Capital

=

20,000 + 1,20,000

=

Rs 1,40,000

Page No 6.26:

Question 10:

If total assets of a business are ₹1,30,000 and capital is ₹80,000, calculate creditors.

Answer:

Assets

=

Liabilities + Capital

1,30,000

=

Liabilities + 80,000

Liabilities

=

1,30,000 – 80,000

=

Rs 50,000

It is assumed that creditors are the only liability of the organisation, thus, Rs 50,000 are the creditors.

Page No 6.27:

Question 11:

'A' commenced his cloth business on 1st April, 2011 with a capital of ₹3,00,000. On 31st March, 2012 his assets were worth ₹5,00,000 and liabilities ₹1,00,000. Find out his closing capital and profits earned during the year.

Answer:

Opening Capital (Capital as on March 31, 2011) = Rs 3,00,000

Page No 6.27:

Question 12(A):

Yogesh commenced business on 1st April, 2011 with a Capital of ₹5,00,000 and a loan of ₹1,00,000 borrowed from Citi Bank. On 31st March, 2012, his assets were ₹8,00,000. Calculate his closing capital and profits earned during the year.

Answer:

Opening Capital (Capital as on 1st April, 2011) = Rs 5,00,000

*It is assumed that loan borrowed from Citi Bank has not been paid till the end of the accounting year.

Page No 6.27:

Question 12(B):

If in the above case, the proprietor had introduced fresh capital of ₹40,000 and had withdrawn ₹10,000 for personal purposes, calculate his profits.

Answer:

Opening Capital (Capital as on 1st April, 2011) = Rs 5,00,000

Page No 6.27:

Question 13:

Give one examples of each of the following transactions :
(i) Increase in an asset and a liability.
(ii) Decrease in an asset and a liability.
(iii) Increase in assets and capital.
(iv) Decrease in assets and capital.

Answer:

Effect of Transaction

Example

(i) Increase in an asset and a liability

Goods purchased on credit

(ii) Decrease in an asset and a liability

Cash paid to creditors

(iii) Increase in assets and capital

Additional capital brought in by the proprietor

(iv) Decrease in assets and capital

Salary paid in Cash

Page No 6.27:

Question 14:

On which side the increase in the following accounts will be recorded? Also mention the nature of account :−

1, Furniture

5. Proprietor's Account

2. Rent Paid

6. Debtor

3. Commission Received

7. Creditor

4. Salary Paid

Answer:

Accounts

Increase Recorded at Side

Nature

1. Furniture

Debit

Asset

2. Rent Paid

Debit

Expense

3. Commission Received

Credit

Income

4. Salary Paid

Debit

Expense

5. Proprietor’s Account

Credit

Capital

6. Debtor

Debit

Asset

7. Creditor

Credit

Liability

Page No 6.27:

Question 15:

On which side the decrease in the following g accounts will be recorded? Also Mention the nature of account:−

1.

Cash

4.

Outstanding Rent

2.

Bank Overdraft

5.

Prepaid Insurance

3.

Rent Paid

6.

Manoj, Proprietor of the business

Answer:

Accounts

DecreaseRecorded at Side

Nature

1. Cash

Credit

Asset

2. Bank Overdraft

Debit

Liability

3. Rent Paid

Credit

Expense

4. Outstanding Rent

Debit

Liability

5. Prepaid Insurance

Credit

Asset

6. Manoj, Proprietor of the business

Debit

Capital

Page No 6.27:

Question 16:

Open 'T' shape account for Machinery and write the following on the proper side :

(₹)

1.

Machinery purchased for

5,00,000

2.

Machinery sold

1,20,000

3.

Machinery discarded

50,000

4.

New Machinery purchased

2,00,000

5.

Machinery destroyed

40,000

Answer:

As we know, Machinery Account is an asset, so, increase in machinery will be recorded on the debit side while decrease in machinery will be recorded on the credit side of the Machinery Account.

Machinery Account

Dr.

Cr.

Particulars

Amount(Rs)

Particulars

Amount (Rs)

Record increase in Machinery on this side-

Record decrease in Machinery on this side-

1. Machinery purchased for

5,00,000

2. Machinery sold

1,20,000

4. New Machinery purchased

2,00,000

3. Machinery discarded

50,000

5. Machinery destroyed

40,000

Total

7,00,000

Total

2,10,000

Balance

4,90,000

7,00,000

7,00,000

Page No 6.28:

Question 17(A):

Open 'T' shape account of our creditor 'Raghubir' and write the following transactions on the proper side :−
1. Purchased goods from Raghubir on credit for ₹50,000.
2. Returned goods to Raghubir for ₹5,000.
3. Paid to Raghubir ₹30,000.
4. Purchased goods from Raghubir on credit for ₹16,000.
5. Paid to Raghubir ₹20,000.

Answer:

Raghubir is a creditor, which means, it is a liability for the business. As we know, increase in liability is recorded on the credit side while decrease in liability will be shown on the debit side of the concerned liability account.

Raghubir Account (Creditors)

Dr.

Cr.

Particulars

Amount(Rs)

Particulars

Amount
(Rs)

Record decrease in Creditors on this side-

Record increase in Creditors
on this side-

2. Returned goods to Raghubir

5,000

1. Purchased goods on credit from Raghubir

50,000

3. Paid to Raghubir

30,000

4. Purchased goods on credit from Raghubir

16,000

5. Paid to Raghubir

20,000

Total

55,000

Total

66,000

Balance

11,000

66,000

66,000

Page No 6.28:

Question 17(B):

Question

Answer:

Commission can be an expense as well as an income. So, when commission is paid, it is shown on the debit side of the Commission Account while commission received (being an income) will be shown on the credit side of the Commission Account.

Commission Account

Dr.

Cr.

Particulars

Amount(Rs)

Particulars

Amount
(Rs)

Record Expenses on this side-

Record Income on this side-

2. Commission Paid

2,000

1. Commission Received

5,000

3. Commission Received

1,500

Total

2,000

Total

6,500

Balance

4,500

6,500

6,500

Page No 6.28:

Question 18:

Put the following on the proper side of Cash account, Debtor's account and Creditor's account :
(a) Sold goods for cash ₹60,000.
(b) Sold goods to Hari on credit ₹20,000.
(c) Purchased goods from Krishan on credit ₹36,000.
(d) Purchased goods from Krishan for cash ₹10,000.
(e) Cash received from Hari ₹15,000.
(f) Cash paid to Krishan ₹28,000.

Answer:

Increase in Cash (being an asset) will be shown on the debit side and decrease in cash will be recorded on the credit side of the Cash Account.

Cash Account

Dr.

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

Record increase in Cash on this side-

Record decrease in Cash on this side-

(a) Sold goods for cash

60,000

(d) Purchased goods for cash

10,000

(e) Cash received from Hari

15,000

(f) Cash paid to Krishan

28,000

Total

75,000

Total

38,000

Balance

37,000

75,000

75,000

Increase in Debtors (being an asset) will be shown on the debit side and decrease in them will be recorded on the credit side of the Debtors Account.

Debtors Account

Dr.

Cr.

Particulars

Amount(Rs)

Particulars

Amount (Rs)

Record increase in Debtors on this side-

Record decrease in Debtors on this side-

(b) Sold goods on credit

20,000

(e) Cash received from debtor

15,000

Total

20,000

Total

15,000

Balance

5,000

20,000

20,000

Increase in Creditors (being a liability) will be shown on the credit side and decrease in the creditors will be recorded on the debit side of the Creditors Account.

Creditors Account

Dr.

Cr.

Particulars

Amount(Rs)

Particulars

Amount (Rs)

Record decrease in Creditors on this side-

Record increase in Creditors on this side-

(f) Cash paid to creditor

28,000

(c) Purchased goods on credit

36,000

Total

28,000

Total

36,000

Balance

8,000

36,000

36,000

Page No 6.28:

Question 19:

From the following transactions prepare the Proprietor's Account in 'T' shape :Prepare Accounting Equation from the following:

2013

(₹)

April 1

Commenced business with Cash

5,00,000

August 1

Introduced additional Capital

1,00,000

Dec. 31

Drawings

40,000

2014

Feb. 28

Drawings

20,000

March 31

Net Profit shown by Profit & Loss A/c

1,25,000

Answer:

Capital Account

Dr.

Cr.

Particulars

Amount(Rs)

Particulars

Amount (Rs)

Record decrease in Capital on this side-

Record increase in Capital on this side-

Dec. 31: Drawings

40,000

April 01: Commenced business

5,00,000

Feb. 28: Drawings

20,000

Aug. 01: Introduced additional capital

1,00,000

March 31: Profit earned

1,25,000

Total

60,000

Total

7,25,000

Balance

6,65,000

7,25,000

7,25,000

Page No 6.29:

Question 20:

Prepare the Accounting Equation on the basis of the following:
(a) Started business with cash ₹ 1,40,000 and Stock ₹ 2,50,000.
(b) Sold goods (costing ₹ 50,000) at a profit of 25% on the cost.
(c) Deposited into bank account ₹ 1,80,000.
(d) Purchased goods from Mohan ₹ 80,000.

Answer:

ACCOUNTING EQUATION

S. No.

Transaction

Assets

=

Liabilities

+

Capital

Cash

+

Stock

+

Bank

=

Creditors

(i)

Started business with cash and goods

+1,40,000

+2,50,000

+3,90,000

1,40,000

+

2,50,000

=

3,90,000

(ii)

Goods (costing Rs 50,000) sold at a profit of 25% on cost

+62,500

–50,000

+12,500 (Profit)

2,02,500

+

2,00,000

=

4,02,500

(iii)

Deposited into bank

–1,80,000

+1,80,000

22,500

+

2,00,000

+

1,80,000

=

4,02,500

(iv)

Purchased goods from Mohan

+80,000

+80,000

22,500

+

2,80,000

+

1,80,000

=

80,000

+

4,02,500

Working Note:

WN1Calculation of Selling Price

Page No 6.29:

Question 21:

Prepare Accounting Equation on the basis of the following transactions:
(a) Started business with cash ₹ 70,000.
(b) Credit purchase of goods ₹ 18,000.
(c) Payment made to creditors in full settlement ₹ 17,500.
(d) Purchase of machinery for cash ₹ 20,000.